- US PPI data in focus; digesting surge in Australia Confidence & Japan Services survey, weak German Trade & UK BRC Sales; also awaiting German ZEW; key commodity reports – CASDE, WASDE & EIA S-T Energy Outlook; Dutch, German & US bond auctions; central bank speakers & Romania rate decision
- USA PPI: further strong gains in headline and core seen m/m, base effects to rein in y/y this month, but turns adverse in November & December
- Charts: US PPI primary to final demand y/y; US PPI headline vs core
EVENTS PREVIEW
While the data schedule is relatively busy, it is likely that only US PPI will really hold much sway over markets, with risk appetite clearly being heightened after the run of G10 central bank meetings in recent weeks underlined an inordinate amount of caution, and continued to send dovish signals. The latter gets a little more traction, with Fed officials now openly fretting about spill-over effects from China’s property sector woes, though the Fed’s record on ‘reading the runes’ of China’s economy and above all its markets is notably poor as the 2016 panic demonstrated. There are also the big jumps in Australia’s Westpac Consumer Confidence and Japan’s Economy Watchers (services) survey (current conditions 55.5 best since 2013), UK BRC Retail Sales (tepid rebound) and German (exports soft) & French Trade to digest, while Germany’s ZEW survey is expected to ease back again on Expectations and Current Conditions. A busy day for key monthly commodity reports with the USDA’s WASDE following on from China’s CASDE in the Agricultural space, while the US’ EIA publishes its Short-Term Energy Outlook as energy price pressures show no sign of abating, and the US continues to pressure OPEC for more oil, while trying to cap domestic output, i.e. paradoxical, some might say hypocritical . On the central bank front there a number of Fed speakers, with the Bank of Finland hold its annual Emerging Economies conference with a number pf Eurozone, Chinese and Russian central bankers, and Romania’s BNR is expected to hike rates a further 50 bps, as Europe’s non-Eurozone central bank continue to diverge heavily with the ECB in policy terms. Govt bond supply takes the form of Dutch 17-yr, German 2-yr and US 10-yr, while a relatively busy run of corporate earnings has results from Nissan and Porsche, along with DR Horton and Palantir.
** U.S.A. – October PPI **
– For all that many had been talking of inflation reaching a peak in the summer months, there has been no respite in pipeline pressures as the two attached charts underscore, and while energy and agricultural prices have been key contributors, so have many other commodities along with the supply chain disruptions in the transport/logistics sector, as the high level of core PPI attests. Both headline and core are seen unchanged in y/y terms at 8.6% and 6.8% respectively, on the back of rises of 0.6% and 0.5% m/m, with the risks perhaps modestly on the upside given the rebound in the ISM and other surveys’ price measures. Given little sign of supply constraints easing near term, and with base effects being adverse in both November and December, headline PPI could quite easily get as high as 10.0%. The prolonged period of elevated inflation is clearly already spilling into wages, leaving the Fed’s ‘transitory’ narrative looking very frayed, and would do regardless of whether Powell is re-nominated, or the reins of the Fed are handed over to Brainard.
To view the full report and to sign up for daily market commentary please email admisi@admisi.com
The information within this publication has been compiled for general purposes only. Although every attempt has been made to ensure the accuracy of the information, ADM Investor Services International Limited (ADMISI) assumes no responsibility for any errors or omissions and will not update it. The views in this publication reflect solely those of the authors and not necessarily those of ADMISI or its affiliated institutions. This publication and information herein should not be considered investment advice nor an offer to sell or an invitation to invest in any products mentioned by ADMISI.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.